Germany: House pricing boom!

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Claudia Buch, vice-president at the Bundesbank said that almost 90% of German households expect property prices to keep increasing. “We have basically seen all indicators — prices, credit — those indicators kept increasing in Germany and you don’t really see a big effect of the pandemic.”

Despite the global pandemic, Germany’s house price boom continues strong, thanks to low interest rates, weak construction supply, as well as the increased demand from more than 1 million refugees. This is a significant shift, in a country where the housing market has historically been extraordinarily stable.

During the year to Q1 2021, the price rose by 11.12%. Quarter-on-quarter, nationwide house prices rose by 3.23% during the latest quarter.

More specific:

  • Apartment prices rose by 11.46% 
  • New home prices rose by 7.51% 
  • Existing home prices surged by 14.73%

Strong house price rises are expected to continue this year, buoyed by low interest rates, as well as the prevailing supply shortage in major cities.

Today’s rapidly rising residential prices reflect a delayed response to a long period in which Germany has not built enough.

Germany’s capital, Berlin, is the seventh most populous urban area in the European Union.  It ranked 13th out of 231 cities included in the Mercer’s Quality of Living Index. In Berlin apartments continued to register strong price rises (7.2%) during 2020 to a median price of €4,743 per m2.

Munich is Germany’s third largest city and is home to many major universities, museums, and architectural attractions. It is a traffic hub and is one of Germany’s fastest growing cities. It ranked highest (overall: 3rd out of 231 cities) among major German cities in Mercer’s Quality of Living Index. In Munich, the median apartment price rose by 5.1% y-o-y to €7,882 per m2.

Cologne, Germany’s fourth largest city, hosts more than thirty museums and hundreds of galleries. In Cologne, median apartment prices rose by 10.6% y-o-y to €3,609 per m2.

Frankfurt is the fifth largest city in Germany. It is Germany’s financial centre and is known for its major trade fairs. In Frankfurt, apartment prices rose by 5.5% to €4,138 per m2.

Stuttgart is Germany’s sixth largest city, and is known as the Cradle of the Automobile. Stuttgart had the strongest y-o-y apartment price hike in South Germany in 2020, increasing by 7.3% y-o-y to a median price of €4,037 per m2.

Source: GPG

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